Huang Industries is considering a proposed project whose estimated NPV is $12 million. This estimate assumes...

70.2K

Verified Solution

Question

Finance

Huang Industries is considering a proposed project whoseestimated NPV is $12 million. This estimate assumes that economicconditions will be "average." However, the CFO realizes thatconditions could be better or worse, so she performed a scenarioanalysis and obtained these results:
EconomicScenario Probability ofOutcome NPV
Recession 0.05 ($68 million)
Below average 0.20 (14 million)
Average 0.50 12 million
Above average 0.20 18 million
Boom 0.05 30 million
Calculate theproject's expected NPV, standard deviation, and coefficient ofvariation. Round your answers to two decimal places. Enter youranswers for the project's expected NPV and standard deviation inmillions. For example, an answer of $13,000,000 should be enteredas 13.
E(NPV) =
?_NPV =
CV =

Answer & Explanation Solved by verified expert

4.3 Ratings (829 Votes)

See Answer

Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:

Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!

Become a Member

Transcribed Image Text

Huang Industries is considering a proposed project whoseestimated NPV is $12 million. This estimate assumes that economicconditions will be "average." However, the CFO realizes thatconditions could be better or worse, so she performed a scenarioanalysis and obtained these results:EconomicScenarioProbability ofOutcomeNPVRecession0.05($68 million)Below average0.20(14 million)Average0.5012 millionAbove average0.2018 millionBoom0.0530 millionCalculate theproject's expected NPV, standard deviation, and coefficient ofvariation. Round your answers to two decimal places. Enter youranswers for the project's expected NPV and standard deviation inmillions. For example, an answer of $13,000,000 should be enteredas 13.E(NPV)=?NPV=CV=

EconomicScenario	Probability ofOutcome	NPV
Recession	0.05	($68 million)
Below average	0.20	(14 million)
Average	0.50	12 million
Above average	0.20	18 million
Boom	0.05	30 million